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Raising money is hard, and there’s no way to screw it up faster than going around asking, “Hey, could you introduce me to some investors?” It’s sort of like when, on the second day of school, a goofy freshman asked me if I could introduce him to any girls.

Reason 1: Not every investor is the right investor for you

Asking for introductions to “investors” marks you as someone who doesn’t really know what they’re doing. An investor/company match is very specific, and if you want to find your fit, you’re going to have to figure out what you’re looking for.

Most investors specialize in certain fields. Some will invest in early stage companies, some later. Some will invest in entrepreneurs they’ve just met; some will only invest in people they’ve known for years. Some require a track record and grey hair; some like betting on smart people straight out of college. Some invest big, some small. Some do just a few investments a year, some do hundreds.

Furthermore, investor styles differ. Some give you tons of room to maneuver; some like to work closely with you. Some offer tons of help and advice; others are just about the cash. Some will want regular updates; others don’t like to be bothered.

Before you start looking for investors, figure out what kind of investors you want, and what kind of investors will want you.

Reason 2: It’s lazy and rude

Somebody has to be the matchmaker. That means thinking about your startup, then comparing it to every investor your contact knows and decide if it’s a fit. The right person to do that (or at least take a first pass at it) is you, since you know your company best, and only you know who you’ve already talked to. You do this by researching your contact on Linkedin to figure out who they know, then researching those investors to see who’s a good fit. Check their website, their portfolio, their blog – get a sense of what they look for, and cross them off the list if they already have competing investments.

Sound like a lot of work? It is. That’s why you should do it, not your friend.

Reason 3: They’ll give you a crappy introduction

Asking for an introduction from someone who doesn’t know you well yet never works. If you haven’t pitched your contact and sold them on how awesome you are, there’s no way they are going to convince an investor to take a chance on you. That’s because they’re going to have to tee up the intro, and if the nicest thing they can say about your company is that it “sounds interesting”, the intro isn’t going to go anywhere. You want them super-jazzed about what you’re doing, and more importantly, you want them to be able to deliver a summary of your company in one or two sentences. So give them the pitch and ensure they love it.

Note that this all implies that you can summarize your own company in one or two sentences. This deserves an article of its own. Actually, it deserves a book of its own, and that book is “Made to Stick”. If you’re stuck, go read it. But I digress.

A great investor intro is about conveying enthusiasm. So you need to sell them, then give them simple tools to sell the investor.

The right way

Step 1: Do your homework. Before you meet your contact, have an explicit list of 1-4 people you would like an intro to. And this is definitely about people – it’s better to ask for an intro to Bob Smith than it is to ask for Acme Investors.

Step 2: Pitch your contact first. Treat them like an investor, even if they’re not. Good first-pitch rules apply: don’t teach them; tease them. Show them just enough to get them to want more. Be sure to hammer your one or two line summary a few times so they know it.

Step 3: The ask. Say, “If you wouldn’t mind, I’d really appreciate introductions to A, B, and C. Can I shoot you an email with a one paragraph summary of the business that you can forward along?”

Step 4: The reach. NOW is when you say, “And are there any other investors you can think of that I should be talking to?” You’ve done your homework, they know about your business, it’s OK to ask them to ponder a bit to see if you missed any one. And it’s easy for them to say, “No, your list is great” – you’re not obligating them to come up with any one.

Step 5: Followthrough. Immediately after you step out of the meeting, send separate emails – one for each invitation request – that say something like:

Hello <contact>! Thanks for taking the time to talk today. Your perspective on the business was really helpful. I appreciate you offering to connect us with <investor> – feel free to forward this email to <him/her>. I’m including a brief description of us below.

<<brief description of business>>

Again, do one per investor, so they can easily forward each one to the right person, hopefully along with a little note that says you’re not a bozo.

Fundraising is hard

Look, I’ve been there. Fundraising is daunting. Actually, terrifying. You want to be able to just get it done, so you imagine that it’s possible to just ask around, meet some nice people, wow them with your charm/business plan/demo, and get on with building your company. And sometimes it is.

But it’s usually not. And the teams that invest the most in fundraising seem to have the best results. (Well, the teams with huge traction or great resumes have the best results, but if you’re killing it on those fronts, you’re already cashing investor checks). If you’re a new team with a demo and a dream, you’ve got a lot of work cut out for you.

Saw this from Dave Schappell on Twitter and have to say it is spot on. I was thinking about writing a similar post based on many such conversations. Cannot tell you how many folks I get that either ask for intros or get sent my way that are totally inappropriate. Great post.

Will Miceli

Great post, the art of taking it one step at a time. I really like the paragraph headings, makes it easy to scan the whole article quickly before diving in.

Nick Soman

Thanks Dan. Great post.

Bob Crimmins

Rock solid once again, Dan. Thanks for providing me with yet one more link that I can send to folks when then just aren’t getting it. I hand these two like Halloween candy:

The only wrong answer is 50/50: Calculating the cofounder equity split

What You Probably Don’t Know About Non Disclosure Agreements

http://www.danshapiro.com/blog Dan Shapiro

Ha! The funny thing is I write these not because people bug me about them… I write them because they’re all stupid things I did that I don’t want other people to suffer through.

http://www.danshapiro.com/blog Dan Shapiro

Ha! The funny thing is I write these not because people bug me about them… I write them because they’re all stupid things I did that I don’t want other people to suffer through.

http://www.danshapiro.com/blog Dan Shapiro

Thanks! I’ll try to keep that up.

http://www.danshapiro.com/blog Dan Shapiro

Thanks! I’ll try to keep that up.

http://www.danshapiro.com/blog Dan Shapiro

Yeah. I Was That Guy. Now reformed and preaching the gospel.

http://www.danshapiro.com/blog Dan Shapiro

Yeah. I Was That Guy. Now reformed and preaching the gospel.

Anonymous

Thanks Dan, very useful!

Carlos Diaz

I never belief in asking a VC for another VC’s intro… Would you invest in something if someone says to you “You should put you money here, it sounds great, I didn’t, but you should…”?

Tom Gaughan

Great advise!!

… But investors have it all their own way for now and that’s going to change as the financial world gets smaller and more competitive. Soon investors will be fighting to get to the entrepreneurs. In the last 10yrs investors have missed out on amazing opportunities because they are risk adverse. They should go back to basics and invest in real businesses to drive global growth out of this recession.

I agree that often it’s best to first sell the introducer and then ask for intros to specific people rather than putting the burden on the introducer. However, if you know the introducer well and they really like you, they can also make a good introduction based on you as a person. If the investor also knows the introducer well, an intro based on the person is often sufficient for a first meeting. This avoids a false negative where the introducer may not get/like your business even though the investor might have. VC contacts of mine often fund projects I would not, so I primarily focus on vouching for the person and not the likely outcome of their investment–especially if it is in an area I know little about, which is more often than not.

http://www.danshapiro.com/blog Dan Shapiro

I’ve introduced a lot of people to investors, and it’s rare that they don’t ask me what I think of “the deal” that they’re working on. I suppose it’s possible to say “I don’t know, I didn’t bother to ask them, but I think they’re really neat.” That doesn’t seem like an optimal conversation, though.

Manuel Medina

Dan – great post. It also makes sense in the context of Group Talent offering options to start ups to continue bootstrapping via short term projects – in essence using time in exchange of money instead of giving equity.
Look forward to our meeting!

m

Aude Olivia

Great blog, useful and motivating. What is good too is that you’re not only saying what not to do, you’re actually sharing an action plan.

Ps. Can you get me an intro to Dave Shapiro? Here’s our 125 pages business plan. :)

Joshua Hays

I learned this the hard way. One of my first start ups was a social media aggregation service and I asked my contact to reach out to some of the people with deep pockets he knew and get me a meeting. Long story short, I pitched a old-school real-estate investor. He had no clue where I was coming from. Part of the learning process I guess. :)

Anonymous

Thanks for this one Dan-Will be needing in the fall here..

http://twitter.com/b2bsalesprof Daniel Sloan

Great information! The entire article I kept waiting for the part where you talked about your product and service….kudos for keeping it pure. I retweeted….nice job.

http://www.totaltab.com Nick Reuter

Isn’t “the right way” just another way of asking for introductions? It sounds like what you are really saying is don’t just blast the shit out of untargeted investors and those who know investors in the hopes of getting money.

If you feel you have a good product, have an opportunity to discuss it with someone who knows an investor, I think that’s a perfectly legit thing to do, assuming the investor is targeted to your market and is really a good fit for your business. (basically what you said in the “The Right Way” paragraph).

I used Linkedin quite a bit to research investors and see how I’m connected to them, and then found out if the people who connect us are actually people I am comfortable going to with our concepts and plans. And (so far) I have almost always pitched these meetings as introduction and advice meetings, not direct pitches for funds. If that happens, it’s a bonus, but the advice and insight you gather from meeting people is equally important. NickTotalTabhttp://www.totaltab.com

Nikhil Kalghatgi

Dan, great summary. When an entrep sends me a separate email for each intro requested it is a great sign of how they think through the total customer experience. The irony is that far too many investors (me included!) fail to eat their own dogfood. When both parties have done their homework, the discussion is MUCH better and prevents meetings that weren’t the best use of time. Thanks again.
Nikhil
@nikhilkal

Greg Tapper

Good article Dan– direct and to the point. Also, very realistic and wise. Looking forward to more posts!

http://www.cgeventures.com Christopher Erckert

Great job Dan.

I would also say once you have your company teaser line and what type of investors you need. Going to a bunch of events where an angel or vc is guest speaking to a small group like GA or meetups can be an easy way to introduce yourself after the event, give the speaker the 30 second pitch of where your at and what type of investor you meet, can be enough for them to get their card and do followup networking to make your way to the right fit.

Teo Asinari

Dear Dan,
Sorry to bug you on your blog, but your not a 1st or 2nd connection on Linkedin.
My name is Teo; I’m a freshman at Mudd who is responsible for finding people to make presentations or just discuss the issues related to startups for the Mudd Entrepreneurship Club.

I’m very impressed with your work and we would love to have you come for and discuss your experiences with Sparkbuy and the acquisition by Google.

Feel free to send me an email at tasinari@g.hmc.edu or send me an inmail on linkedin (I found you through the HMC Alumni group) if you are interested.